Alaska Air Group, Inc. (ALK) | Investment Case

1. Company Snapshot

1.a. Company Description

Alaska Air Group, Inc., through its subsidiaries, provides passenger and cargo air transportation services.The company operates through three segments: Mainline, Regional, and Horizon.It flies to approximately 120 destinations throughout North America.

Alaska Air Group, Inc.was founded in 1932 and is based in Seattle, Washington.

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1.b. Last Insights on ALK

Alaska Air Group's recent performance was positively driven by recovering corporate demand, rising premium mix, and a revamped loyalty program post-Hawaiian Airlines acquisition. The company's Q4 earnings exceeded guidance, with strong cost control and premium cabin revenue now 36% of total. Corporate bookings for Q1 2026 surged ~20% year-over-year. Additionally, the Atmos Rewards loyalty program revamp and expanded long-haul network enable the company to capture higher-value travelers. Analysts rate the stock as "Moderate Buy" with 8 buy ratings and 2 hold ratings.

1.c. Company Highlights

Last Price	52.58
Change Percentage	0.86%
Open	51.82
Previous Close	52.13
Market Cap ( Millions)	6028
Volume	2088961
Year High	73.98
Year Low	37.63
M A 50	52.16
M A 200	51.15

FCF Yield	-5.62%
Dividend Yield	0.00%
ROE	2.47%
Debt / Equity	167.39%
Net Debt / EBIDTA	484.23%
Price To Book	1.48
Price Earnings Ratio	60.75
Price To FCF	-17.78
Price To sales	0.42
EV / EBITDA	9.5

2. Alaska Air Group's 2025 Earnings: A Resilient Performance Amidst Challenges

Alaska Air Group reported a fourth-quarter adjusted earnings per share (EPS) of $0.43, significantly beating the estimated $0.11. The company's full-year adjusted EPS stood at $2.44, ahead of revised guidance. Total revenues for the fourth quarter were $3.6 billion, up 2.8% year-over-year on 2.2% capacity growth, resulting in unit revenues up 0.6%. The adjusted pretax margin for the full year was 2.8%, down about 1 point compared to 2024. The company's focus on premium cabin revenues paid off, with a 6.7% increase, outperforming Main Cabin by 7 points for the full year.

Publication Date: Feb -09

                                    📋 Highlights
                                    Adjusted Earnings Outperformed Guidance::
                                                Full-year adjusted EPS was $2.44, $0.33 above guidance, driven by $0.43 Q4 EPS and improved non-fuel costs ($0.75 EPS lift from $0.10 fuel price changes).
Share Repurchases Accelerated::
                                                Executed $570M in buybacks in 2025 ($0.28/share at $10/share price), over 50% of the $1B authorization, reducing shares outstanding and boosting shareholder value.
2026 EPS Guidance Raised::
                                                Full-year adjusted EPS projected at $3.50–$6.50 ($4.50 midpoint vs. 2025’s $2.44), reflecting margin expansion and synergy realization from the $1B profit unlock plan.
Premium Cabin Revenue Growth::
                                                Revenues rose 6.7% YoY, outperforming Main Cabin by 7 points, contributing 36% of total revenue and driving margin resilience.
Long-Term Capacity Growth Secured::
                                                261 aircraft order with Boeing (largest in history) ensures growth through 2035, aligned with $10 EPS 2027 target and $1B pre-tax profit synergy goals.

                                

Operational Highlights and Strategic Initiatives

The company made significant strides in 2025, securing the largest aircraft order in its history with Boeing, solidifying growth through 2035 with an outstanding order book of 261 aircraft. The launch of Atmos Rewards, a unified loyalty program, and a new premium credit card drove unprecedented increases in card spend and new card members. The company is confident in its ability to execute on its plans, with a focus on running excellent and productive core airline operations, and delivering durable financial performance.

Outlook and Guidance

For 2026, the company expects full-year earnings per share to be in the range of $3.50 to $6.50, representing a meaningful improvement over 2025. The guidance range assumes the company delivers on synergy and initiative value, laps one-time issues that impacted earnings in 2025, and faces potential risks such as macroeconomic factors or fuel price volatility. The company remains committed to driving $10 of earnings per share and executing on its $1 billion profit unlock plan.

Valuation and Financial Health

With a current P/E Ratio of 68.68 and EV/EBITDA of 10.17, the market seems to be pricing in a significant level of growth and profitability for Alaska Air Group. The company's Net Debt / EBITDA ratio stands at 4.84, indicating a moderate level of leverage. As the company continues to execute on its strategic initiatives and drive margin expansion, investors will be watching closely to see if the company can meet its ambitious EPS goal of $10 by 2027.

Key Drivers and Risks

The company's performance is closely tied to its ability to manage fuel price volatility, with every $0.10 change in fuel price translating to $0.75 of earnings per share. Additionally, the company's cost profile is pressured by labor deals and real estate step-ups. However, the company is working to offset inflation through cost performance and incremental revenue, and is confident in its ability to achieve parity with industry peers on fuel prices.

3. NewsRoom

Alaska Air Group CCO Sells 5500 Shares After Company Invests $3B into Hub Airports

Feb -22

Source: fool.com

Alaska Air Group (NYSE:ALK) EVP Sells $794,745.00 in Stock

Feb -20

Source: defenseworld.net

Alkane Resources Ltd (ALK:CA) Q2 2026 Earnings Call Transcript

Feb -13

Source: seekingalpha.com

Invitation to the presentation of ALK's annual report 2025 on Friday, 20 February 2026

Feb -13

Source: globenewswire.com

Alaska Air Group, Inc. (NYSE:ALK) Receives Average Recommendation of “Moderate Buy” from Analysts

Feb -13

Source: defenseworld.net

Ben Brookman promoted to Vice President of Real Estate and Airport Affairs for Alaska Airlines

Feb -12

Source: prnewswire.com

Alaska Airlines and Hawaiian Airlines introduce spring menus featuring regional favorites and chef-led dining

Feb -11

Source: prnewswire.com

Arista Wealth Management LLC Buys Shares of 8,385 Alaska Air Group, Inc. $ALK

Feb -10

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.70%)

6. Segments

Mainline

Expected Growth: 5%

Alaska Air Group's Mainline segment growth is driven by increasing demand for air travel, particularly in the West Coast market, where the company has a strong presence. Additionally, the airline's focus on operational efficiency, modernization of its fleet, and strategic route network expansion contribute to its growth. Furthermore, the company's loyalty program and revenue management initiatives also support revenue growth.

Regional

Expected Growth: 4%

Alaska Air Group's regional segment growth is driven by increasing demand for air travel in the Pacific Northwest, strategic partnerships with major airlines, and investments in modernizing its fleet with more efficient aircraft. Additionally, the company's focus on improving customer experience and expanding its route network has contributed to its 4% growth.

Horizon

Expected Growth: 3%

Horizon's 3% growth is driven by increasing demand for air travel in the Pacific Northwest, Alaska Air Group's strategic expansion into new markets, and investments in modernizing its fleet. Additionally, the airline's focus on improving operational efficiency and customer experience contributes to its growth momentum.

Consolidating & Other

Expected Growth: 2%

Alaska Air Group's Consolidating & Other segment growth is driven by increased demand for cargo services, expansion of its loyalty program, and strategic partnerships. Additionally, the company's focus on cost reduction initiatives and investments in digital transformation have contributed to its 2% growth.

7. Detailed Products

Alaska Airlines

Passenger air travel services, including flights, baggage handling, and in-flight amenities

Horizon Air

Regional air travel services, connecting smaller communities to major hubs

Cargo Services

Air cargo transportation for packages, freight, and perishable goods

Mileage Plan

Loyalty program offering rewards, upgrades, and travel perks

Airport Services

Ground handling, fueling, and other airport support services

8. Alaska Air Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Alaska Air Group, Inc. faces moderate threat from substitutes, as customers have limited alternatives for air travel. However, the company's focus on customer experience and loyalty programs helps to mitigate this threat.

Bargaining Power Of Customers

Alaska Air Group, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's loyalty programs and customer retention strategies help to maintain customer loyalty.

Bargaining Power Of Suppliers

Alaska Air Group, Inc. relies on a few major suppliers for aircraft and fuel, which gives them some bargaining power. However, the company's long-term contracts and relationships with suppliers help to mitigate this risk.

Threat Of New Entrants

The airline industry has significant barriers to entry, including high capital requirements and regulatory hurdles. This makes it difficult for new entrants to compete with established players like Alaska Air Group, Inc.

Intensity Of Rivalry

The airline industry is highly competitive, with multiple players competing for market share. Alaska Air Group, Inc. faces intense competition from major carriers, which can lead to pricing pressure and reduced profitability.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.57%
Debt Cost	4.36%
Equity Weight	60.43%
Equity Cost	11.99%
WACC	8.97%
Leverage	65.48%

11. Quality Control: Alaska Air Group, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Nordson

A-Score: 5.1/10

Value: 2.5

Growth: 5.8

Quality: 7.1

Yield: 2.0

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

Robert Half

A-Score: 5.0/10

Value: 6.0

Growth: 3.2

Quality: 6.0

Yield: 8.0

Momentum: 0.0

Volatility: 6.7

1-Year Total Return ->

Lennox International

A-Score: 4.6/10

Value: 2.5

Growth: 7.7

Quality: 6.6

Yield: 2.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

Southwest Airlines

A-Score: 4.4/10

Value: 5.3

Growth: 3.0

Quality: 3.6

Yield: 3.0

Momentum: 6.0

Volatility: 5.3

1-Year Total Return ->

American Airlines

A-Score: 3.9/10

Value: 7.6

Growth: 4.8

Quality: 3.4

Yield: 0.0

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

Alaska Air

A-Score: 3.5/10

Value: 6.4

Growth: 4.6

Quality: 3.1

Yield: 0.0

Momentum: 2.5

Volatility: 4.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

34.03%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.97%

Alaska Air Group, Inc. - US0116591092

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ALK

1.c. Company Highlights

Fairly Valued

Average Quality

Stable Momentum

Earnings Beats

Revenues Miss

Average Yield

Cheaper

Lower Quality

Revenues Beats

Strong Momentum

Earnings Miss

Medium Volatility

2. Alaska Air Group's 2025 Earnings: A Resilient Performance Amidst Challenges

Operational Highlights and Strategic Initiatives

Outlook and Guidance

Valuation and Financial Health

Key Drivers and Risks

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.70%)

6. Segments

Mainline

Expected Growth: 5%

Regional

Expected Growth: 4%

Horizon

Expected Growth: 3%

Consolidating & Other

Expected Growth: 2%

7. Detailed Products

Alaska Airlines

Horizon Air

Cargo Services

Mileage Plan

Airport Services

8. Alaska Air Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Alaska Air Group, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

52.58$

Current Price

52.58$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA